Siddharth Shriram, the promoter of Jay Engineering Works, has proposed major structural changes to turn around the ailing Calcutta-based engineering company of the Siel group.
The Rs 49-crore revised rehabilitation package includes merger of the ailing Jay Engineering with Usha International, massive voluntary retirement scheme for over 771 workers and modernisation of the plant which includes shutting down of the companys foundry unit.
This rehabilitation proposal had been placed before the Board for Financial and Industrial Reconstruction (BIFR) by Siddharth Shriram, during the second week of January, 1997. Of the total amount, the promoters contribution would be Rs 33 crore. The workers union have suggested the financing of the remaining Rs 16 crore through sale of land owned by the company.
Siddharth Shriram, took over the management of the Siel group from his father Charat Ram only in mid 1996. The revised proposal had been prepared by the new management after the financial institutions had refused to support the earlier revival plan.
The revised proposal, which has suggested merger of Jay Engineering with Usha International, has stated that, The companys profitability has been affected by its marketing tie-up with Usha International which should be merged with the company. Pending merger of Usha International with the ailing company, the commission and mark-up provided to Usha should be reduced by atleast 50 percent. The proposal also has a voluntary retirement scheme (VRS) for 771 workers against 63 workers as proposed earlier.
The reduction of workforce would ensure the viability of the company. it stated.
Moreover, the foundry unit of Jay Engineering will be shut down as part of the modernisation plan. The proposal said, With the premium end of the sewing machines market going in for plastic castings, it would be necessary to make a shift by discontinuing operation at the companys existing foundry and purchasing substitute plastic components from outside.
According to BIFR officials, the revised proposal has the consent of the workers and the financial institutions, the only outstanding issue being clearance from the West Bengal government for the sale of the surplus land by the sick company.
